Income tax in Nepal
Taxation Researcher | October 15, 2020
INDIVIDUAL TAXATION
Residents are taxed on their worldwide income. Married couples may be taxed jointly or separately. Different tax rates apply to married couples filing jointly or separately.
INCOME TAX
Taxable income in Nepal includes (1) income from business, (2) investment income, (3) employment income, and (4) other income. Generally, net taxable income from each category is computed separately and then aggregated to arrive at the total net taxable income.
Income tax is levied at progressive rates. The applicable tax bands differs for individual taxpayers, and married taxpayers filing jointly.
INCOME TAX 2020-20211 FOR INDIVIDUALS |
|
| TAXABLE INCOME, NPR (US$) | |
| Up to 400,000 (US$3,604) | |
| 400,000 – 500,000 (US$4,505) | |
| 500,000 – 700,000 (US$6,306) | |
| 700,000 – 2,000,000 (US$18,018) | |
| Over 2,000,000 (US$18,018) | |
| Source: Global Property Guide | |
INCOME TAX 2020-2021 FOR MARRIED |
|
| TAXABLE INCOME, NPR (US$) | |
| Up to 450,000 (US$4,054) | |
| 450,000 – 550,000 (US$4,955) | |
| 550,000 – 750,000 (US$6,757) | |
| 750,000 – 2,000,000 (US$18,018) | |
| Over 2,000,000 (US$18,018) | |
| Source: Global Property Guide | |
RENTAL INCOME
Rental income from leasing property is subject to 10% withholding tax. This tax is credited to the taxpayer´s annual tax liability.
CAPITAL GAINS
Acquisition costs and related expenses are deductible when calculating taxable capital gains.
Capital gains realized from selling real property that are used in business are considered ordinary income and taxed at the standard income tax rates.
Capital gains realized from selling real property that are not used in business are taxed at a flat rate of 10%.
PROPERTY TAX
Urban House and Land Tax
The urban house and land tax is levied on the value of the property. Depreciation is taken into account, at rates ranging from 0.05% to 1.50% per year, depending on the type of construction of the house.
URBAN HOUSE AND LAND TAX |
|
| TAX BASE, NPR (US$) | |
| Up to 1 million (US$9,009) | |
| 1 million - 2 million (US$18,018) | |
| 2 million - 3 million (US$27,027) | |
| 3 million - 5 million (US$45,045) | |
| 5 million - 10 million (US$90,090) | |
| Over 10 million (US$90,090) | |
| Source: Global Property Guide | |
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